The current transformation of the health services industry is unparalleled in its rapidity and breadth. One of the fastest growing and least understood multi-institutional arrangements coinciding with this transformation is contract management (CM), whereby an outside organization is contracted to provide comprehensive management services for a particular hospital. Unfortunately, research attention has only recently been directed towards this organizational innovation, with exiting studies generally limited in sample size and/or methodological sophistication. More important, however, is the lack of a theoretical framework to guide research efforts aimed at understanding the implications of contract management. This study attempts to address both the theoretical and methodological shortcomings of existing contract management research. Specifically, in analyzing the antecedents and consequences of contract management, this study seeks to: 1) develop an integrative conceptual framework for understanding the antecedents and consequences of CM, 2) extend the range of variables under investigation beyond the limited set of financial indicators typically used by adding subjective performance measures supplied by trustees of managed hospitals, as well as bond price changes coinciding with the CM decision, 3) apply particularly appropriate and rigorous statistical techniques for analysis, such as discriminant analysis and Chow ANCOVA tests, rather than anecdotal approaches or simple associative tests. In summary, the study seeks to provide a comprehensive evaluation of the impact of CM on the delivery of health services.